Euro Slides as French Fiscal Fears Widen France-Germany Yield Gap

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Summary · why it matters

The Euro came under intense selling pressure against its major currency peers as increased French fiscal concerns and political instability drove a sharp widening in the yield gap between French and German government bonds. France's Finance Minister Roland Lescure has vowed to cut the budget deficit from a target of 5% of economic output next year to the European Union limit of 3% by 2029, but analysts at BBH said they doubt the proposal will clear parliament without significant concessions, given the minority government. Ten-year French bond yields rose 0.65% to near 4.89% at press time after posting a fresh multi-decade high near 5% on Friday, and have gained over 28% in the last two months, while 10-year German Bund yields fell 1.26% to near 3.41% and have risen over 10% over the same period. The weaker Euro could boost the competitiveness of exports but raises the cost of imported goods, complicating the European Central Bank's fight against energy-driven inflation, and investors will focus later in the day on a speech by ECB Chief Economist Philip Lane scheduled for 08:00 GMT. Heightened French risk concerns have also improved the safe-haven appeal of the Swiss Franc, with investors watching Swiss Unemployment Rate data for September due on Tuesday.

Impact on assets 3

Others± Mixed · 2 stocks
％France Government Bond 10Y
FR-10Y
▼ NegativeMonetaryrelevance

French 10Y yields surged to multi-decade highs on fiscal concerns and political instability, widening the France-Germany spread.

Others▼ · 1 stocks
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